Form 26Q – TDS Return for Non-Salary Payments

Q: What payments are covered under Form 26Q?

All non-salary payments to resident Indians under Sections 194A to 194S — interest, contractor payments, commission, rent, professional fees, goods purchase (194Q), benefits (194R), and crypto/VDA (194S). Excludes salary (Form 24Q) and NRI payments (Form 27Q).

Q: What is the difference between Section 194J(a) and 194J(b)?

194J(a): technical services, film royalty, call centres — TDS at 2%. 194J(b): professional services (doctors, lawyers, architects) and non-compete fees — TDS at 10%. Both have ₹30,000 threshold. Correct coding in Form 26Q is essential for accurate Form 16A certificates.

Q: What is Section 194Q?

Buyers with turnover above ₹10 crore must deduct TDS at 0.1% on goods purchases exceeding ₹50 lakh from a single seller. Effective 1st July 2021. Does not apply where seller already collects TCS under Section 206C(1H).

Q: What happens if deductee PAN is wrong or missing?

TDS at 20% under Section 206AA. Deductee cannot see TDS credit in 26AS and cannot claim it in ITR. File a Form 26Q correction statement on TRACES to restore the deductee's credit.

Q: How are Form 15G and 15H handled in Form 26Q?

Valid 15G/15H declarations exempt the deductor from TDS on qualifying payments. Number of declarations received and aggregate amount must be reported in Form 26Q. Failure to report creates 26AS mismatches and unnecessary refund claims.

Quarterly TDS Return Filing for Contractor, Rent, Professional Fee, Interest and Other Non-Salary Payments

Form 26Q is the quarterly TDS return that must be filed by every deductor for Tax Deducted at Source on all non-salary payments made to resident Indians. It covers TDS deducted under Sections 194A to 194S of the Income Tax Act, 1961 — including interest on deposits (194A), contractor payments (194C), commission and brokerage (194H), rent (194I), professional and technical fees (194J), purchase of goods (194Q), and all other specified non-salary payments.

Accurate Form 26Q filing ensures vendors, professionals, contractors, and landlords receive correct TDS credit in their Form 26AS — enabling them to properly claim TDS in their ITR filings. For salary TDS returns see our Form 24Q service, and for NRI payments see Form 27Q. We also assist with Lower Tax Deduction Certificates and complete TDS return filing.

Our Form 26Q Filing Services

TDS Computation — All Non-Salary Sections

Accurate TDS computation for every non-salary payment type — applying the correct rate and section code for interest (194A), contractors (194C), commission (194H), rent (194I), professional fees (194J), and goods purchase (194Q).

Form 26Q Preparation Using RPU

Systematic data entry and preparation of Form 26Q using NSDL's Return Preparation Utility — with complete deductee PAN validation, section codes, payment amounts, and challan reconciliation before FVU validation and filing.

Quarterly Filing & Acknowledgement

Timely quarterly filing of validated Form 26Q through TIN-FC or TRACES online portal, generation of the provisional receipt number (PRN), and archiving of all quarterly returns and acknowledgements.

Form 15G / 15H Management

Management of Form 15G and 15H declarations received from deductees — ensuring TDS is not deducted on qualifying payments and correctly reporting these declarations in Form 26Q as required by CBDT circulars.

Form 16A Certificate Generation

Quarterly generation of Form 16A TDS certificates from TRACES for all non-salary deductees — verified against Form 26Q data before distribution to vendors, professionals, contractors, and landlords.

Correction Statement Filing

Filing of Form 26Q correction statements for errors in previously filed returns — incorrect PAN, wrong section codes, challan mismatches, or wrong TDS amounts — processed through TRACES to update deductee 26AS credits.

Key Due Dates & Penalty Overview

Q1 (April–June): due 31st July
Q2 (July–September): due 31st October
Q3 (October–December): due 31st January
Q4 (January–March): due 31st May
Late filing fee of ₹200 per day under Section 234E — non-waivable and auto-computed by CPC-TDS
Invalid or incorrect deductee PAN triggers TDS at 20% under Section 206AA — professional PAN validation prevents this
Section 194Q (TDS on goods purchase above ₹50 lakh) applicable since 1st July 2021 — many businesses remain non-compliant

Frequently Asked Questions

What payments are covered under Form 26Q?

Form 26Q covers TDS on all non-salary payments to resident Indians under Sections 194A to 194S — including interest on deposits (194A), lottery winnings (194B), contractor and subcontractor payments (194C), insurance commission (194D), commission and brokerage (194H), rent on land, building, and equipment (194I), professional and technical fees (194J), cash withdrawals above ₹1 crore (194N), purchase of goods above ₹50 lakh (194Q), benefits and perquisites (194R), and virtual digital assets / cryptocurrency (194S). It does not cover salary (Form 24Q) or payments to non-residents (Form 27Q).

What is the difference between Section 194J(a) and 194J(b)?

Section 194J was amended to split into two sub-sections: 194J(a) covers fees for technical services, royalty on films, and call centre payments — TDS rate is 2%. Section 194J(b) covers fees for professional services (doctors, lawyers, architects, accountants, engineers, etc.) and non-compete fees — TDS rate is 10%. Both have a threshold of ₹30,000 per year per payee. Correct coding in Form 26Q is critical — using the wrong sub-section results in incorrect TDS certificates (Form 16A) and mismatches in deductee's 26AS.

What is Section 194Q and who needs to comply?

Section 194Q (effective 1st July 2021) requires any buyer whose total sales or gross receipts exceed ₹10 crore in the preceding financial year to deduct TDS at 0.1% on the purchase of goods from a resident seller where aggregate purchases from that seller exceed ₹50 lakh during the year. Section 194Q does not apply where the seller is already collecting TCS under Section 206C(1H) on the same transaction — only one of the two provisions applies. Form 26Q must include all Section 194Q deductions using the correct section code.

What happens if deductee PAN is wrong or missing?

If a deductee's PAN in Form 26Q is invalid or missing, TDS must be deducted at the higher of the prescribed rate or 20% under Section 206AA. More critically, an incorrect PAN means the TDS credit does not appear in the deductee's Form 26AS — they cannot claim the TDS in their ITR, leading to disputes and damaged business relationships. Correction through a Form 26Q correction statement on TRACES is required to restore the deductee's TDS credit. Pre-filing PAN validation against the income tax database prevents this entirely.

How are Form 15G and 15H handled in Form 26Q?

When a deductee submits a valid Form 15G (individuals below 60 years) or Form 15H (senior citizens above 60) declaring that their income is below the taxable limit, the deductor is not required to deduct TDS on eligible payments such as interest under Section 194A. The deductor must report the number of Form 15G/15H declarations received and the aggregate amount covered in Form 26Q. Failure to report these declarations correctly — or deducting TDS despite receiving a valid declaration — creates compliance issues in the deductee's 26AS and may lead to unnecessary refund claims.

Form 26Q Filed Accurately — Every Section, Every Quarter

Our TDS experts prepare and file your quarterly Form 26Q covering all non-salary payment sections.